Tesla Motors Inc (TSLA): The Potential For More Gains

Jay Taylor: Electric carmaker Tesla Motors Inc (NASDAQ:TSLA) has big plans for China. And those plans have the potential to send the high-flying Tesla Motors stock even higher.

After resolving a legal dispute with a Chinese businessman who registered “Tesla Motors” back in 2006, the stage has been set for Tesla’s new frontier.

China is increasingly an important market for makers of luxury goods. The country boasts a population of 1.4 billion people, and has a rapidly growing population of wealthy people.

China is already one of the world’s best markets for luxury cars. By 2015, it could become the #1 market.

For most luxury car buyers in China, “luxury” seems to be synonymous with “European.” Audi, BMW and Mercedes-Benz currently make up more than 70% of the Chinese market for high-end cars.

And these brands are scared.

Yes, the Chinese market for high-end cars is larger than $40 billion annually. But competitors from all over the world are desperately trying to capture the Chinese market.

General Motors (NYSE: GM) announced big plans to expand its Cadillac unit. The company hopes to build a dedicated facility in China to keep production costs and shipping costs down.

The Chinese luxury car market is certainly competitive, but the market is ripe for disruption. And Tesla has proven to be very effective at disrupting the markets it enters.

Tesla opened its Chinese flagship store in Beijing at the end of 2013. In 2014, the company plans to open at least 10 more stores.

Thus far, Tesla is rolling out a similar strategy that was successfully executed in the U.S. and Europe. That includes manufacturer-owned dealers and a network of Supercharge stations that allow drivers to charge up for free.

Tesla also wants to open a production facility in China, increasing the company’s ability to win customers in the region. The company’s plans are rapidly advancing, with founder Elon Musk expected to visit China in March to review production facility options.